The US dollar declined against most currencies today on hopes that US politicians will be able to resolve the problems with automatic spending cuts and tax increases that may push the US economy into recession. The greenback managed to gain versus the euro and the Japanese yen.
Senate Majority Leader Harry Reid said that negotiations will resume today and he hopes that some last-minute solution will be found. Previously, Reid complained about lack of progress in talks about avoiding the so-called fiscal cliff. Traders welcomed more optimistic comments from him and that drove the dollar down.
The euro suffered even as the Forex market favored risky currencies today. It looks like market participants recalled about the problems of Europe as fears of a crisis in the United States had receded.
GBP/USD rose from 1.6165 to 1.6258 as of 18:11 GMT today. At the same time, EUR/USD declined from 1.3214 to 1.3183, while USD/JPY climbed from 86.08 to 86.64 — the highest settlement since July 2010.
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